Premier profit up 28% despite Brexit woe

Premier Investments shares have surged to their highest value in nearly a year after the Solomon Lew-backed retail conglomerate lifted profit and hiked its payout on strong sales at pyjama shop Peter Alexander and Just Jeans.

Premier increased net profit by 27.7 per cent to $106.8 million as total income rose by 7.3 per cent to $1.28 billion in the 12 months to July 27, a figure that would have been even higher were it not for Brexit-related headwinds.

The company’s Peter Alexander sleepwear chain lifted its sales 13.3 per cent to $247.8 million to almost reach its 2020 growth target a year ahead of schedule, while Smiggle’s revenue hit $306.5 million on strong sales in Asia – though the stationery chain’s 4.6 per cent sales growth was well down on 22.7 per cent in FY18.

Premier also said it would be bringing forward $26 million in depreciation charges against its UK Smiggle operations as it breaks lease options amid Brexit uncertainty.

“Recent political developments in the UK, including the appointment of Boris Johnson as Prime Minister, have added further political and economic uncertainty to an already distressed retail and landlord environment,” Premier Investments said in a release on Friday.

Nonetheless, Premier reaffirmed Smiggle’s growth strategy target of $450 million revenue by the end of 2022.

The company on Friday also increased its final dividend by four cents to 37 cents, fully franked.

Shares in the company were up 14.5 per cent to $17.99 by 1020 AEST, nearly a 12-month high.

Mr Lew highlighted a strong online sales performance across Premier’s brands, with online revenue of $148.2 million up 31.7 per cent on a year ago and contributing 13.4 per cent to total FY19 sales.

Total sales at Premier’s apparel range – which includes Just Jeans, Jay Jays, Dotti and Portmans – grew by 6.9 per cent to $716.7 million following a brand repositioning, with like-for-like sales increasing by 7.8 per cent.

The company had written down the value of Just Jeans, Jay Jays and Dotti by $30 million in FY19 before refocusing its sales approach last September.

This included closing unprofitable stores due to “unrealistic” rents, with Premier’s flagship Just Jeans store in Melbourne’s Chapel Street one of 26 apparel stores closed during the year.

Though Smiggle’s sales slowed in FY19, the brand’s global expansion has stretched to South Korea, Thailand, Indonesia, Philippines, United Arab Emirates and Canada since the end of the financial year.

Premier said Smiggle has the potential to grow to more than 350 stores with the existing six wholesale partners within the next two years, while talks with other third party groups such as Alibaba are ongoing.

To date in FY20, Smiggle has received a total of $17 million of orders from its wholesale partners, which Premier said has the potential to deliver between $35 million and $45 million in retail sales to consumers in 1H20.

“These retail sales alone would represent 20 per cent to 25 per cent sales growth on Smiggle’s 1H19 actual global retail sales,” the company said.

Meanwhile, Premier Investment’s 27.4 per cent stake in Breville Group reaped $18.9 million in associate income after the home appliance manufacturer increased its full-year profit by 15.2 per cent.

AAP

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